|Apartment prices in Ho Chi Minh City remain lower than regional peers such as Kuala Lumpur and Bangkok, though the southern city reported much stronger growth rates in comparison with these markets. (Photo: vnmedia.vn)
The remark is bouyed by the fact that apartment prices in Hanoi and Ho Chi Minh City generally remain lower than regional peers like Kuala Lumpur and Bangkok, though the southern city posted much stronger growth rates in comparison with these markets.
This was also highlighted in the “Vietnam residential: Where to from here” report by real estate services provider Savills Vietnam.
According to Neil Macgregor, Managing Director of Savills Vietnam, the average price across the local market is expected to continue to grow, albeit at a somewhat slower pace. Indeed, price increases can be linked to higher development standards and continued strong residential demand driven by urbanization, the rapid growth of middle class, as well as new infrastructure.
Macgregor added that new home prices in Ho Chi Minh City’s central business district now average from US$5,500 - 6,500 per square meter, a fraction of the eye watering levels seen in Hong Kong (China) where prices are at all-time highs.
The property analyst asserted that relatively low taxation in Vietnam increasingly acts as a magnet to buyers from both home and abroad with many countries introducing cooling measures, resulting in higher taxation.
It comes as no surprise that the demand for investment properties in Vietnam has increased significantly since 2015, when new housing regulations made the domestic market open to foreign investors.
“With a distinct shortage of prime property in Vietnam’s key cities, many buyers can see the potential for significant capital gains over the longer term. Whilst in the meantime, rental yields in excess of 5 per cent, represent an attractive investment versus falling returns elsewhere in the region.”
In the luxury end sector, there is tremendous upside and opportunity for long-term investment, with buyers set to benefit from potential capital appreciation as Vietnam continues its remarkable growth story, he forecast.
Although there is still a long way to go before the Vietnamese property market reaches the dizzying heights seen in Hong Kong (China) and Singapore, Vietnam is well on the way to becoming Asia’s next tiger, with strong economic growth, a rapidly growing middle class, and, for the time being at least, relatively affordable pricing, said the Savills expert.
Latest data mentioned in the Savills World Cities Prime Residential Index points out that the index inched by just 2.3 per cent across 2018 as a whole, slowing to a marginal 0.4 per cent in the second half of the year. In 2017, the figure enjoyed a higher rise, 3.3 per cent.
Rental growth also slowed across the index, leaving the average world city yields for prime residential assets at a 10-year low of just 3.2 per cent.
Sophie Chick, head of Savills World Research entity, assumes that prime residential real estate values are settling into a pattern of slower, steadier price growth. Thus, she put no high expectations on a repeat of the double-digit annual price growth seen in the pre-global financial crisis.